The new CGT regime: Where are we now? By Nichola Ross Martin

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An overview of main changes coming to the CGT regime on 6th April 2008 with some of the planning pitfalls to take into consideration prior to the new regime and beyond.

Note: This article was updated on 11 March 2008

From 6 April 2008 substantial changes to Capital Gains Tax (CGT) will apply to individuals, trustees and personal representatives, but not for companies.

Finance Act 2008 will introduce the following changes:

  • A main rate of CGT of 18% will apply to all gains other than those covered by the new entrepreneurs tax relief or the CGT annual exemption.

  • A lower rate of 10%* for gains on certain business assets which are covered by the new Eentrepreneurs relief (see below).

  • Capital gains will not longer be taxed by reference to income tax ra...

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EMI schemes
Nichola

Useful thought on exercise of EMI options or other options, understand from HMRC that there is NO present intention to provide access to the Entrepreneurs Relief based on the date of the grant of the options (as with taper relief which accrued from date of grant). Therefore to benefit from the Entrepreneurs Relief, options would need to be exercised at least 12 months prior to a disposal; ie the shares must be held and the remaining presecribed conditions met for 12 months.

Therefore seems likely that most of the gains arising on the sales of shares derived from the exercise of options under EMI schemes are likely to be taxed at 18% simply because the majority of EMI schemes are established as exit schemes (ie the option holders can only exercise in the event of a sale - subject to the 10 year backstop date).

Any one got any useful comments to add on this as I think we will now spend a lot of time explaining to those who have set up schemes why employees with more than 5% will still get taxed at 18%.

Mike Bell.

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31 March 1982 valuations
Looks like there'll be plenty of time spent negotiating 31 March 1982 values. Professional valuers must be rubbing their hands at the prospect of more business.

On the banking indexation point - what's the position where an asset has been put in joint names with spouse/civil partner? I can see where there is an outright gift but where the gift is say a half share in the asset by being put in joint names, what happens then?

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stamp duty and other things.
I take it there is stamp duty on spouse to spouse transfers of land and property ?

Now for higher rate tax payers, CGT at 18% is considerably lower than income tax. I am sure there will all sorts of cunning schemes to exploit this.

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Consistency
So ... husband - wife (civil partner ...) transfers in the interests of reducing tax liability are positively smiled on in this context, are they ?

Perhaps I'm just being small-minded in seeking consistency ...

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